Penguin and Random House agree merger

Bertelsmann, the German media company, and Pearson, its UK rival, are merging Random House and Penguin, their respective publishing units, in response to the rapidly developing challenges of the e-book revolution.

In a move likely to trigger more consolidation, the companies said 53 percent of Penguin Random House would be owned by Bertelsmann, and the other 47 per cent held by Pearson, which also owns the Financial Times. Both media companies had agreed to hold their stakes for at least three years and it was likely that Bertelsman would seek to increase its shareholding thereafter, according to a person briefed by the German side. Both Bertelsmann and Pearson were also said to have the right to trigger an initial public offer after five years.